Does a CBDC Reinforce Inefficiencies?

This paper examines whether a central bank digital currency (CBDC) reinforces inefficiencies in transactions with cash. In this case, the gap between the traded quantity and the welfare-maximizing one, which arises due to discounting or a suboptimal amount of money, increases further. To get some a...

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Опубліковано в::MAGKS - Joint Discussion Paper Series in Economics (Band 28-2022)
Автор: Fuchs, Max
Формат: Стаття
Мова:англійська
Опубліковано: Philipps-Universität Marburg 2022
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Резюме:This paper examines whether a central bank digital currency (CBDC) reinforces inefficiencies in transactions with cash. In this case, the gap between the traded quantity and the welfare-maximizing one, which arises due to discounting or a suboptimal amount of money, increases further. To get some answers, the monetary search model of Trejos and Wright (1995) is extended by a CBDC. We show that an interest-bearing CBDC reinforces inefficiencies in transactions with cash since opportunity costs for cash holders and money supply increase. Nevertheless, a CBDC is able to increase welfare as long as the share of CBDC holders is limited.
Фізичний опис:20 Seiten
ISSN:1867-3678
DOI:10.17192/es2024.0736